5-Feb-2012 - Greek Debt Talks Progress, but Budget Fight Threatens Bailout

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Josef Ackermann, chairman of a banking group that is negotiating with Greece, said in Frankfurt on Thursday that an agreement with private bondholders black studio headphone from monster was possible “in the next few days.” “I don’t think we’re very far apart,” Mr. Ackermann, who is chief executive at Deutsche Bank, said at a news conference Thursday to present the bank’s quarterly earnings. But in Athens, Lucas D. Papademos, the Greek prime minister, was struggling to get political parties to line up behind further budget cuts to make up a shortfall of €4.4 billion, or 5.8 billion. His efforts were hampered by turmoil within the parties, including a challenge to the former prime minister, George A. Papandreou, from within his Pasok party, the largest in Parliament. In a further possible complication, euro zone leaders are expected to ask the three parties in the governing coalition, which are gearing up for elections, to endorse the terms of a second bailout. Providing that a deal is reached with Greece’s creditors, euro zone finance ministers will meet Monday to decide on the conditions Greek politicians would have to accept to secure the €130 billion bailout. Greek leaders have no choice but to approve unpopular measures, said Pantelis Kapsis, the government spokesman. “It’s time for difficult decisions,” Mr. Kapsis said on the private television channel Mega. “As a country we have reached the edge of official default.” Without further aid, Greece is almost certain to default when a bond repayment of €14.4 billion comes due in March. Evangelos Venizelos, the Greek finance minister, said that the budget gap might be covered by reducing state spending on medicines, cutting military spending and closing down state-backed entities. He did not give details. Mr. Ackermann said that holders of Greek bonds would probably take a 70 percent pro over-ear red headphone loss, but he said he was confident that it would still be possible to work out a voluntary arrangement with creditors. “A default would be much more expensive,” he said. Mr. Ackermann is chairman of the Institute of International Finance, a banking industry group that has taken the lead in negotiating on behalf of Greece’s private sector creditors. There was some question, however, as to whether a deal with creditors would be enough to bring Greek debt down to a level where the country would have a realistic chance of repaying it. Mr. Ackermann suggested that the European Central Bank, which owns Greek bonds with an estimated face value of €50 billion, might also need to pitch in. “Investors have made a big contribution,” Mr. Ackermann said, in response to a question about the E.C.B.’s role. “With so much at stake, all sides should contribute.” The E.C.B. has refused to take part in debt relief because it does not want to be seen as providing financing to governments, which it regards as a violation of its charter. There is speculation, however, that the E.C.B. might find a way to contribute profit from its holdings of Greek bonds. The E.C.B. bought the bonds on the market at a steep discount and could profit from interest payments and repayment of principal. In a sign that market tension about the euro zone has eased somewhat, Spain and France were able to sell bonds at reduced interest rates Thursday. The successful sales helped calm fears that the countries’ borrowing costs would become dangerously high. Niki Kitsantonis Solo HD On-ear Headphone Black reported from Athens. Stephen Castle contributed reporting from Brussels.

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